Key open to wider competition for ACC

John Key. Photo / Getty Images

The accident compensation scheme faces a major revamp after the Prime Minister all but confirmed it will soon face private competition in the profitable employers' account, covering workplace accidents.

John Key also indicated the Government was looking at the merits of extending competition to other areas of ACC, including coverage of motor vehicle drivers, in what would be a radical extension of its election policy.

The Act Party yesterday agreed to support the Government's ACC legislation through Parliament in return for a commitment to let private insurers compete with ACC in the work account, into which employers pay to cover workplace accidents.

The decision will not be made until the Government receives the report of a steering group - led by former Labour finance minister David Caygill - but ACC Minister Nick Smith said the "anticipated decision" was to open up the work account as soon as possible. If this did happen, legislation would be introduced next year.

Mr Key said he was confident the plan would go ahead.

He refused to rule out possible similar treatment of other ACC accounts, such as the motor vehicles one, into which car drivers pay levies when renewing their vehicle registration.

Asked if the steering group was looking at other accounts, the PM said the primary focus was on competition in the work account, but "of course they will look at other aspects of the scheme and how it operates".

Mr Key said he would wait for the report before deciding how open National was to any further moves.

But he said other possible changes included allowing more private providers to get into rehabilitation and claims management.

Labour Party leader Phil Goff said signs that National wished to take its policy on competition in ACC further than it initially said showed the work proposal was a "stalking horse for privatisation" of the entire ACC scheme.

He said his party was vehemently opposed and would reverse the changes once back in government.

Mr Key said National had moved on the work account earlier than expected because of the need to compromise to secure support for critical legislation.

But he said it was no secret that National liked competition, and he believed the previous National Government's first attempt to introduce it into ACC, in 1999, had been successful before Labour repealed it.

Act leader Rodney Hide said his party would support the ACC legislation through all its stages, regardless of the findings of the steering group.

He believed ACC's monopoly was unsustainable, as levies were soaring and entitlements were dropping.

The decision leaves the Maori Party, which pledged to support the legislation to select committee only, with little influence to make changes or halt introduction of competition.

Engineering, Printing and Manufacturing Union secretary Andrew Little - who is also Labour's president - said the steering group was "stacked towards privatisation" and was certain to recommend competition.

"This is a purely political decision and it is workers who will pay the price," Mr Little said.

Northern Employers and Manufacturers Federation chief executive Alasdair Thompson said employers would welcome the prospect of lower ACC costs, although many smaller and medium-sized businesses were wary about the instability and costs of adjusting to different ACC policies.

The ACC bill that Act has agreed to support in return for competition will have its first reading next week.

It extends the time by which ACC must be fully funded from 2014 to 2019 and reduces some entitlements, such as income compensation for criminals and payments to families of people who commit suicide.